Shownotes Transcript
Well, folks, yesterday was Liberation Day, and we are going to go through everything tariff-related you could possibly imagine. First, your reminder, we exist to cut through the noise and bring you the unpleasant facts that others will not. Uncensored ad-free daily shows, investigative journalism, live chats with my producers. Breaking news first. No filter, no nonsense. The Daily Wire is where the real story lives. Go to dailywire.com slash subscribe and join the fight today. Okay, so yesterday, President Trump declared that it was, in fact, Liberation Day.
He said this is our economic declaration of independence. I'll start with his announcement yesterday. And then I want to talk about what it is that he actually announced, because the markets are getting rocked and there's a reason they're getting rocked. Here was President Trump yesterday in the Rose Garden celebrating Liberation Day. To be fair, he had warned everybody a month in advance that he was going to do this sort of thing. Here he was. My fellow Americans, this is Liberation Day. Waiting for a long time.
April 2nd, 2025 will forever be remembered as the day American industry was reborn, the day America's destiny was reclaimed, and the day that we began to make America wealthy again. This is one of the most important days, in my opinion, in American history. It's our declaration of economic independence.
Sounds cool. Sounds cool. So how are we going to actually do that? Well, here's the thing. The president's vision of international trade is, I'm sorry to say, mistaken. The president seems to believe that international trade is a zero-sum game. Here is the president explaining that actually the United States is a victim of everyone else when it comes to international trade over the past several decades. Nearly a century later, in the face of unrelenting economic warfare, the United States can no longer continue with a policy of unilateral trade.
economic surrender. We cannot pay the deficits of Canada, Mexico and so many other countries. We used to do it. We can't do it anymore. We take care of countries all over the world. We pay for their military. We pay for everything they have to pay. And then
When you want to cut back a little bit, they get upset that you're not taking care of them any longer. But we have to take care of our people and we're going to take care of our people first. OK, so he's actually making a separate case here, which is that people should pay their own way when it comes to their welfare and defense spending. Totally agree. One hundred percent. That is absolutely true. Also, that has literally nothing to do with what the president of the United States did yesterday. It seems to be predicated his giant tariff policy that he just dropped on the market unilaterally, probably unconstitutionally yesterday.
And I'll get to that in a moment. It's predicated on a few false notions about the American economy. One is that the American economy has been a giant fail for the last 40 years. That is simply not true.
This is a myth that is propagated by both parties. And I know it's a fun myth. It's something people like to believe is that yesterday was economically better than today. And then you look at all the stuff around you and you look at the phone in your pocket and you'll get the computer before you. You look at the Internet, you'll get the fact you can literally order any product at any time from anywhere on Earth. And it arrives at your doorstep in two days at a price you can afford. And you think to yourself, would I rather live in 1980 when the only person with a cell phone was Gordon Gekko on a beach holding a shoebox to his head?
when central air conditioning was kind of a rarity, when the cars, if you were lucky, had electric windows.
Okay, was that like better? Were things better just on an economic level? Forget about everything else. I can make a case about the spiritual level. You can make a case about the dissolution of the family. I agree with many of those cases, but we are talking here about economics. We're not talking about the life of the spirit within. We're talking about economics, which is the distribution of goods and services. So I need to start by showing you a few charts that show you that America, in fact, does not suck and has not sucked for several decades economically, because this is a myth that all politicians like to tell.
Number one, there is this notion that American deindustrialization has been happening. That America has been hollowed out by deindustrialization. That we are not actually manufacturing anymore in this country. That is not true. It is not true. In the mid-90s, the United States was producing in real manufacturing value added. In 1997, we were producing $1.4 trillion. In 2025, we were producing $2.4 trillion.
And it is an arithmetic increase. You can see the line on this chart. We are manufacturing more. Why aren't there more manufacturing jobs? The answer is technology. We're manufacturing more because we have better robots and they're doing much of the work that people seem to have a very warm and fuzzy feeling about, but that they would never want to do themselves. I noticed a lot of people, why can't I have a factory job just like 1955 Ford or something? Yes, I'm sure that you want it to be in a non-air conditioned factory riveting all day. That just sounds like you.
That's most Americans. That's your ideal job. No, it isn't. It isn't. Just like working in a coal mine isn't your ideal job either. Hey, here's another chart. We've been told the lie that the American middle class has been hollowed out by international trade. Here's what actually happened to the American middle class over the course of the last several decades. The American middle class
stayed approximately the same size, shrank a little bit. Why did it shrink? Why did it shrink? Not because people became lower middle class or poor, but because a huge number of Americans went into the upper middle class. The number one change in the status of American families in terms of income
From just before 1980 to about 2015 was a 16 percentage point increase in the upper middle class. In other words, people got richer. And by the way, everyone got richer, including the poor, because the stuff you can get as a poor person in America in 2025 is way the hell better than the stuff that you could get as a poor person in America in 1980. That's just a reality. How about wages? We keep hearing that wages are stagnant, that they stagnated since 1979.
Here, according to the Bureau of Labor Statistics, is a chart. It shows you the average hourly earnings of production and non-supervisory employees. And it shows you what happened to wages between 1980 and 2025. And what you see is a steep increase from the 1990s and up. A very steep increase. I know this cuts against the conventional political wisdom, which is the American economy sucks and it's because everybody is cheating us.
Now, one of the things that President Trump is predicating his tariff war upon is the idea that trade deficits are inherently bad. A trade deficit is where we import more stuff than we export in terms of value.
Now, as I pointed out before, you have a trade deficit with literally every business that you do business with unless they are buying your product. So I have a trade deficit with my local publics, a large trade deficit. They have bought pretty much nothing from me. And I've bought tens of thousands of dollars over the years from my local publics. Clearly, they are screwing me. Or maybe they're not because I'm getting value for my dollar in the form of food and supplies. Or maybe I should go over my publics and just beat the living out of the general manager. I don't know. One of those two things.
Trade deficits are a they're an accounting procedure. Trade deficits. You label something in export and you label something in import. But trade itself is about mutual benefit where you wouldn't do the trade in a voluntary system. So the idea that every trade deficit someone is getting screwed is a zero sum view of how economies work. And it's not true. As Thomas Sowell points out, the eminent economist, quote,
If the goods and services available to the American people are greater as a result of international trade, then Americans are wealthier, not poorer, regardless of whether there is a deficit or a surplus in the international balance of trade. In fact, I can name you a period in American history where there was a fairly large surplus in America's balance of trade, the entire Great Depression. Now, there were times in American history that were great where we also had a surplus. There were times in American history that sucked where we had a deficit and times in American history that were great where we had a deficit.
As it turns out, trade deficits have pretty much nothing to do with the health of an economy. They don't tell you very much. In fact, the French economist, Frédéric Bastiat, who's really cutting about this stuff, writing in the 19th century,
He said, look, if you're so worried about trade imbalances, then actually what you should do is you should sink ships filled with your own exports before they ever get to the other side. So if we're exporting oranges to Europe and they're going to send us apples in return, the best way to ensure that no trade imbalance takes place is we should send our oranges out of the country and we should sink the ship before it ever gets to Europe so they can't send us apples back. Then we have a large export on our ledger and no imports. Great idea. The economy will be stronger.
So a fundamental misunderstanding of trade deficits. And again, that's not balance of payments. That's a different thing. Balance of payments is about the flow of gold. We're no longer on a gold standard, but it's about currencies and all that. Trade deficits are a different thing. The reason I'm bringing up trade deficits is because this is how President Trump is calculating his liberation day tariffs.
According to the Washington Post, President Trump said Wednesday he will impose a new 10% tariff on all imported goods, along with higher import taxes tailored for each of about 60 countries. His advisors say maintain the largest barriers against U.S. products and a sharp turn toward the kind of protectionism the United States abandoned nearly a century ago. So President Trump said that for decades, our country has been looted, pillaged, raped, and plundered by nations near and far, both friend and foe alike. This is not going to happen anymore. Okay, so...
Let's take a look at the Liberation Day, quote unquote, reciprocal tariffs. Okay, so here I have a chart. President Trump held it up. He held like a big chart, like Wheel of Fortune or something. He held like a big chart that showed reciprocal tariffs. And what it said was in one column, the names of the countries, in another column, tariffs charged to the United States, including currency manipulation and trade barriers, and then USA discounted reciprocal tariffs. So his idea is here is the tariff rate that a country is charging us.
And then we're going to take half that rate and charge it to them. There is only one problem. There are many problems. There's only one problem here. What is labeled the tariffs charged to the United States is not, in fact, the tariffs charged to the United States. It is not true. It is not true. And I looked at this and I thought, holy crap, the EU is charging us 39% tariff rates on all products. We're exporting stuff there and they're charging a 39% tariff. That's what this chart says. Japan is charging us 46% tariffs.
Malaysia is charging us, Cambodia is charging us 97% tariffs. And then I thought to myself, self, I said, that doesn't sound correct to me. That doesn't sound right at all. In fact, that sounds totally wild. I mean, that can't be true. And so I made the mistake of actually looking up some of these statistics. What are the actual average annual tariff rates?
that are charged on American goods by countries like, for example, Japan or Taiwan, which this chart says is charging us a 64% tariff rate. And it turns out there is zero correlation whatsoever. Those are not, in fact, the tariff rates that are being charged on American goods going into Taiwan or Japan or India or any of these other places.
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Thank you.
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comes in. It's coming from taking the trade deficit of that country and dividing it into the imports that the United States is taking in from that country and then calling that a tariff rate. That has nothing to do with the tariff rate. Nothing at all. Zero things to do with the tariff rate. The reason, by the way, that we have a tariff. So according to this chart, according to this chart, for example, Madagascar is charging us 93% tariffs and we ought to charge them 47% tariffs.
Hey, that's what it says. That's what the thing says. There is only one problem with this. That is not remotely true. And if we have a trade deficit with Madagascar, then so the hell what? It's Madagascar. The GDP per capita in Madagascar is like $530 a year. Our trade deficit with Madagascar is a few million dollars. Is the idea we have to chisel out of the people of Madagascar
Extra dollars for American products or we are getting screwed by the great and powerful people of Madagascar? Is that the idea here? It makes zero sense. It literally has nothing to do with the actual tariff rate. How do we know this? We have perfect proof. Yesterday, Israel, which already had almost no tariffs on the United States, 99% of all goods coming into Israel had no tariff on them from the United States.
That was something that Israel did in the 2000s because they used to have high tariffs. And what ended up happening is that Israelis would come to the United States, load up their bags with a bunch of American-made goods, and then take them back with them to Israel to avoid the tariffs. So Israel just got rid of all the tariffs. Yesterday, Israel announced zero tariffs on any American goods.
The Trump administration hit them with a 17% tariff anyway, claiming that they had a 33% tariff rate on American goods, which clearly is not true. Why? Because it turns out that we buy more stuff from the Israelis than the Israelis buy from us. Shocker, they're a smaller country. We're a giant market, not a giant shock as it turns out. So this is pretty crazy.
Because it turns out the trade deficit has nothing to do with the tariff rates. So we are punishing countries that have a low tariff rate with us. For example, like South Korea is listed on this chart as having a 50% tariff rate on us. The average tariff rate South Korea has on American goods, according to the World Trade Organization, is 0.79%. We have a free trade agreement with South Korea. It is listed on this chart as 50%. That's nonsense. It's not true. It just isn't true.
And it leads to a 25% reciprocal tariff on all South Korean goods. Now, there are a number of reasons why this is a problem. Okay, whatever. Who cares? Do we need other countries? Okay, so first of all, yes, we do. It turns out that the supply chains all across the planet are incredibly complex. And if you like the products that you have, at the quality that you have them, and the price that you have them, you're not going to get to keep them. You don't get to keep the...
Anybody who tells you that you can is telling you the same kind of falsehood that Barack Obama said when he said, if you like your doctor, you can keep your doctor. You don't get to keep your Xbox at the same rate with the same quality. You don't. That's just not the way that these tariffs are going to work. So what exactly happens? Well, Tyler Cowen points out, quoting Scott Lincecum over at Cato, Trump's reciprocal tariffs impose hundreds of billions of dollars in new taxes on Americans without public or congressional input because that's actually what happened.
I have friends, for example, who import product to the United States and then sell them. Why? Because they can't get the product in the United States. So, for example, I have a friend who's in the jewelry business. And this friend in the jewelry business imports products that are not capable of being manufactured or found in the United States from abroad. So it's not like there's an import substitution you can just buy from an American. That's not how it works. By the way, this company is an American company.
The tariff that is now being applied to all of his imports is like 35, 40%. Those prices will get passed directly onto the consumers. It is a tax paid for by Americans. So this is a massive tax increase on American consumers. That's what it is. And it is designed to be so. And it is talked about in these terms by the Trump administration that this will cost 600, $700 billion in additional revenue to the government. You know what we call revenue to the government typically? Paid for by Americans because that's who pays for it. If you're importing a product and nobody buys it, then...
You stop importing the product and nothing gets paid to the government. It has to be sold. That is the consumer pays the tax. That is what we would call a tax increase. Okay, these secret calculations that are not so secret anymore because it turns out that actually they just have nothing to do with tariffs at all. Those calculations are nonsensical. This idea that President Trump is doing this based on legislation that suggests that there is a national emergency on the basis of trade deficits. No, the answer is no. This is in the purview of Congress.
There is no national emergency that justifies a unilateral tax increase of the size that the administration is attempting to levy down on the basis of a trade deficit. Because we buy more stuff from Madagascar than the Madagascays buy from us, that is not a good reason to declare a national emergency because it ain't a national emergency any more than it's a national emergency that I buy more stuff from my public than they buy from me. By the way, there are already free trade commitments that are now being breached by the Trump administration.
We have free trade commitments. Many of the countries that we are currently slamming with tariffs. Again, it's going to cost American consumers. It will cost American producers who use inputs from other countries. And most importantly of all, if this is supposed to somehow screw, for example, the Chinese, precisely the opposite is about to happen.
Why? Because many of the countries that are about to get absolutely hammered are countries that exist in Southeast Asia. So if you want to know what the actual tariff rates are that these various Southeast Asian nations are charging the United States, the answer is not what President Trump is putting up there, which again is rooted in the trade deficits that we supposedly have with these various nations.
If you want to know the answer, I did. So I asked my friends at Perplexity, sponsors of the show, what are the actual effective tariff rates Southeast Asian nations have against American goods? Not the Trump statistic, which is rooted in trade deficits. Also, please make a chart correlating the trade deficit or surplus those countries have with the United States with their GDP per capita. So according to Perplexity,
The actual effective tariff rates imposed by Southeast Asian nations on American goods very significantly across countries, the figures cited by the Trump administration appear to be exaggerated and based on trade deficits rather than real tariff structures. According to the WTO, Vietnam's average most favored nation tariff rate is approximately 9.4%. Now remember, according to the Trump statistic, the average tariff rate that's being charged by Vietnam, the effective tariff rate is 90%. Okay, so 10 times what the actual tariff rate is, is what the Trump administration is
is claiming Asian nations like Indonesia, Malaysia, impose average MFN rates, most favored nation rates, of 7.5% and 5.6%, respectively. Those numbers are far lower than the inflated numbers presented by the Trump administration. Now, as to trade deficits that we have with these various countries, the answer is because they're poor, they generate cheap product like in Vietnam, your t-shirts probably made in Vietnam, and they have no money. So we run a $95 billion trade deficit with Vietnam
Their GDP per capita is $4,200. $4,200. Okay? So what are we going to do? Chisel that out of them? Precisely? That $95 billion trade deficit? Because we want to buy their t-shirts? Same thing with, say, the Philippines. We have a $5 billion trade deficit with the Philippines. And the GDP per capita in the Philippines is $3,700. Meanwhile, Singapore...
Right. Which Singapore is getting hit with a 10 percent tariff, by the way, for no reason, because we actually have a trade surplus with Singapore. They have a 10 billion dollar trade deficit with the United States. How can Singapore afford that? I mean, aren't we just screwing them? I mean, obviously, according to this logic, we're screwing them. If they have a trade deficit with us, must be that we're jobbing them in some way. The reason that they can have a trade deficit with us is because, wait for it, their GDP per capita is seventy two thousand dollars.
Say again, none of this is rooted in economic reality. And the biggest problem is there's no way to sort of get out of the box that's been created by these statistics. Because if you were saying lower your tariff rates and if the tariff rate is already zero or close to it, where do you go from there? So one of the things that happened during the pandemic is knowing that the Chinese were bad actors. Many producers started shifting their supply chains out of China and into other nearby countries, like, for example, Vietnam.
believing the United States would punish China, but not Vietnam. Well, now the new tariffs slam Vietnam with a 46% tariff. So why don't you shift your production back to China? More importantly, if you're the EU and you're not getting racked by the United States with a gigantic tariff, or if you're Canada and you're getting absolutely ravaged by an American tariff, you need markets for your goods. Where are you going to go? Maybe to a country that is perfectly willing to militarize capitalism on behalf of fascism, the Chinese.
The Chinese are about to make extraordinary inroads in Southeast Asia. They're about to make extraordinary inroads in Europe and in Canada because it turns out when America withdraws from the world and basically declares a trade war on literally everyone, including by the way, an island with no people. I'm not even kidding. This is a thing included in the list of places that President Trump is going to tariff. I wish I were kidding. I'm not kidding. Included in this list is in fact, the herd and McDonald's islands. We are hitting the herd and McDonald's islands with a 10% tariff.
The herd at McDonald Islands include zero people. Includes penguins. We're hitting the peng... Screw them penguins. Penguins. Stupid penguins. Okay, so it...
What exactly is this designed to do? Again, it is predicated on a bad idea of how international trade works. If I've said this a thousand times, this is not coming from a place of I want Trump to fail. It's coming from a place of if he engineers a recession based on these sorts of tariffs, which seems increasingly likely if you were to stick with this, if you were to do that sort of thing.
All of the amazing things that need to happen and that he is pursuing and that his administration is filled with good people who want to do. All that stuff goes by the wayside. A bad economy kills everything around it. It is the neutron bomb of politics. If you drop the neutron bomb of politics, a recession into the lap of this administration, it doesn't just destroy this administration's economic agenda. It destroys the administration wholesale. That is what happens in American politics. Recessions destroy administrations. And by the way, everyone close to them, all the tech bros get destroyed.
All of the business people get destroyed. It's really important not to self-engineer a bad economy. Really quite important. It is frustrating at the very least because this has not been well justified by literally anyone, including members of the Trump administration. J.P. Morgan put out its forecast, quote,
On a static basis, today's announcement would raise just under $400 billion in revenue, or about 1.3% of GDP, which would be the largest tax increase since the Revenue Act of 1968. We estimate that today's announced measures could boost PCE prices by 1% to 1.5% this year. We believe the inflationary effects would be mostly realized in the middle quarters of the year. So, in other words, inflation will start ticking up again fairly significantly. The resulting hit to purchasing power could take real disposable personal income growth in both the second and third quarters into negative territory.
And with it, the risk that real consumer spending could also contract in those quarters. This impact alone could take the economy perilously close to slipping into recession. That's before anyone else tries to punish us for punishing them. This is before, according to JP Morgan Accounting, for the additional hit to gross exports and to investment spending. Headlines about retaliatory measures by U.S. trading partners are already coming out. We expect to learn more in coming days. The somewhat confusing nature of today's news, coupled with uncertainty over how long these tariffs will remain in place, should make for an even less friendly environment for investment spending.
We plan to revisit our forecast later this week. By the way, you know who else is upset? The manufacturers. This was supposed to save the manufacturers, right? You heard President Trump say it. We are going to bring manufacturing back to the United States. Here is a statement from the National Association of Manufacturers President and CEO Jay Timmons. Quote, Needless to say, today's announcement was complicated and manufacturers are scrambling to determine the exact implications for their operations.
The stakes for manufacturers could not be higher. Many manufacturers in the United States already operate within margins. The high cost of new tariffs threaten investment, jobs, supply chains, and in turn, America's ability to outcompete other nations and lead as the preeminent manufacturing superpower. Manufacturers build things in America to sell around the world. And manufacturers in America share President Trump's goal of supporting manufacturing investment growth and expansion here at home.
To empower manufacturers to drive the economy, the administration should minimize tariff costs for manufacturers investing and expanding in the United States, ensure tariff-free access to critical inputs manufacturers use, secure better terms for manufacturers by negotiating zero-for-zero tariffs. So in other words, bring the tariffs down, not increase them.
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And so President Trump, again, he was laying these out. He's very enthusiastic about it yesterday in the Rose Garden. He tried to suggest that if tariffs are so bad, why do other people do them? Here he was trying to make this case. If you look at that, China, first row, China, 67%. That's tariffs.
charged to the USA, including currency manipulation and trade barriers. So 67%, I think you can, for the most part, see it. Those with good eyes, with bad eyes. We didn't want to bring... It's very windy out here. We didn't want to bring out the big charts because it had no chance of standing. Fortunately, we came armed with a little smaller chart.
So 67 percent. So we're going to be charging a discounted reciprocal tariff of 34 percent. I think in other words, they charge us. We charge them. We charge them less. So how can anybody be upset? So then he said, if imposing tariffs and protective barriers actually made us poor, then why would other countries be doing it? Here is President Trump saying this.
We charge 2.8% for so many things that other countries are charging 200%, 300%, then 400% for. If imposing tariffs and protective barriers made nations poor, then every country on earth would be racing to eliminate these policies, and China would be the first on the line. They run a very strong country. Okay, well, actually, as it turns out, many countries have spent the last couple of centuries eliminating many of these policies.
And maybe we should take a look at what he's saying. Here is a chart. It shows that actually the countries that have, for example, as a general matter, the lowest tariff rates are also the countries with, wait for it, wait for it, wait for it, the highest GDP per capita. Why it turns out that richer countries have been steadily lowering their tariff rates. And many of the poorest countries on earth have really, really high average tariff rates, including by the way, Madagascar and Burundi and the Central African Republic. Why it's almost as though
Tariff rates actually decrease wealth because tariffs increase prices and reduce trade and all the things that tariffs are designed to do. And President Trump suggested that the tariffs are kind and they are generous and they are friendly. Here he was saying that the tariffs are kind because it's only half the rate that other countries are charging us. But as we've already discussed, and herein lies the problem, those aren't the real tariff rates.
For nations that treat us badly, we will calculate the combined rate of all their tariffs, non-monetary barriers and other forms of cheating. And because we are being very kind, we're kind people, but we will charge them approximately half of what they are and have been charging us. So the tariffs will be
Not a full reciprocal. Okay, here is the actual thing. Those are not the real tariff rates, and this is why it matters. Why does it matter how the calculation is done? The reason it matters is because if the goal was to get other countries to lower their tariffs, which I am totally fine with, I would love it. That would be great.
If that was the goal, then you can't tariff countries that have no tariffs on us where we already have a free trade agreement. If you are using trade deficits to calculate a fake tariff rate and using that as the margin of tariff on those countries, there is literally no way for them to forestall the tariffs you are putting on their country other than by presumably getting the people of Madagascar to somehow buy millions of dollars of American product.
or the people of Ethiopia to buy billions of dollars of American product, GDP per capita, Ethiopia, 950 bucks a year. By the way, the actual tariff rates among the biggest countries in the world are actually fairly low. According to the World Trade Organization, the United States has a trade-weighted average tariff rate of 2.2% in 2023. That's compared with 2.7% for the EU, 1.9% for Japan, 3.4% for Canada, 3.3% for China, and 1.7% for Switzerland. I mean...
If the goal is to get the tariffs lower, then let's, maybe we should do that. Maybe that should be the actual goal here. Maybe that's what we should do. Well, Scott Besson, the Treasury Secretary, he was asked about all of this. And his basic perspective is, it's not clear how long these tariffs are going to last, how they're going to be implemented.
As we'll get to in a moment, there are already exemptions that are being put out there for the tariffs by the Trump administration immediately. Here was the Treasury Secretary. These are our closest allies, South Korea, Japan. When you look at those countries and the tariffs that they're being charged, if they're calling, what would you say to those nations who may have concerns about how to lower these numbers? Well, I would say they've been doing it to us for a long time. And if
they don't like tariffs, then why do they have them? And should we view these as permanent? Again, I think we're going to wait and see how this plays out. We're going to wait and see how this plays out is the hope of all markets everywhere, because the markets are sending pretty strong signals. They don't like it very much, by the way, by the polling. Again, this notion that Americans are just a hate foreign trade. They hate it with a pat.
Gallup poll 2025. What do you think foreign trade means for America? Do you see foreign trade more as an opportunity for economic growth increased through U.S. exports or a threat to the economy from foreign imports? 81% opportunity for economic growth. 14% threat to the economy. I have a basic rule in politics. Do not take the 20 side of 80-20 issues. Unless there is like a great moral reason to do so. Don't do it. It's not a good idea.
So what exactly is the Senate going to do? Well, the Senate voted on a resolution that says that they're going to try to seize back power from the executive branch over tariffs like this. It would require action in the House to actually stop this. I doubt that that's going to happen anytime in the near future. The Republican Party is, of course, very much split over this. Nobody wants to go up against the Trump administration on this. This is the purview of Congress. Let's be clear. What President Trump is doing should never, if it was ever delegated by Congress to the executive, that's insane. And it probably wasn't.
It's not a national emergency that justifies one of the biggest tax increases on American consumers in the history of America. It is a very, very, it does not, it does not justify that. There is no national emergency because the United States buys more product from Thailand than we sell to Thailand. That is not in fact a national emergency. Again, there are many reasons why tariffs can be good. Tariffing China to punish them, to try and cut them off from the world economy, good. This, by the way, is also why you should sign free trade agreements with all the nations that rim China.
tariffs for purposes of protecting national security laden industries in the United States. Good and useful. We can't have outsourcing if God forbid we need to produce things for a war or a pandemic or whatever. Tariffs in order to get other countries to drive down their own fine and good.
But the tell to me here is, again, I go back to this. If the idea is to get other countries to lower their tariffs, if this is raise the tariffs to lower the tariffs, then why are we charging tariff rates on countries that don't have tariffs against us? Why? That's the tell. And so the question becomes what this actually looks like in practice. Now, I've been a little bit catastrophist about this because I'm taking the Trump administration at their word. The reality is I don't think that this thing gets implemented anything like it is currently being retailed to the public. I think in reality-
The Trump administration is likely to bull those holes right through this tariff regime in the areas that it figures is going to most hurt Americans. And it's likely to try and leverage headlines out of various foreign nations, suggesting they're going to invest in America to the tune of some billions of dollars before lowering the tariff rates again. Because as I've said before, I do have faith that President Trump
actually responds to headlines and responds to the news. He lives in the world of reality, and it would not be living in the world of reality for him to simply ignore if markets hate all of this, if costs start going up, if a recession is imminent. He does not want to preside over a recession, which is why, again, I think this policy is misbegotten. I also think President Trump is not going to implement it as currently stated. So what does this actually mean in practice? Well, the White House quietly put out a fact sheet yesterday,
to all of its embassies, talking about what exactly President Trump is doing. So apparently, the tariffs will remain in effect until such a time as President Trump determines the threat posed by the trade deficit and underlying non-reciprocal treatment is satisfied, resolved, or mitigated. So he can unilaterally decide, hey, we solved the trade deficit, all done. So presumably, what does that mean? That means you got a few announcements from various countries saying that we're going to invest in the American economy. And then President Trump's like, big headline win, tariff gone. He could easily do that.
I'm hoping that's what he is planning on doing. Also, there are some very key goods that are not actually going to be subjected to the tariffs, including, by the way, steel and aluminum articles and auto and auto parts already subject to Section 232 tariffs. Copper, pharmaceuticals, semiconductors and lumber articles. OK, well, this and this shows you the bizarreness of this sort of tariff regime. One of the things that the tariffs were allegedly designed to do was reshore manufacturing of key components, like, for example,
Semiconductors. Semiconductors are basically the oil of the 21st century. They're the thing no one can operate without. So if you actually wanted to reshore through tariffing and protectionism, manufacturing of semiconductors, you would leave the tariffs on the semiconductors. But he doesn't want to do that because it'll radically increase the price of every product that uses a semiconductor, ranging from your phone to your fridge. So he's exempting that.
All articles that may become subject to future Section 232 tariffs, bullion, and energy, and other certain materials that are not available in the United States. So we're still going to be importing that Canadian gas, presumably, which, by the way, is the reason we have a trade deficit with Canada. We have a trade surplus for literally everything else except for gas. Like if you take away the gas in the American balance of trade with Canada, we have a surplus with Canada. Meanwhile, USMCA compliant goods will continue to see a 0% tariff
Non-USMCA compliant goods will see a 25% tariff. Non-USMCA compliant energy and potash will see a 10% tariff. Again, I do not think this policy is the long lasting, durable, strictly imposed policy that is currently being laid out by the White House. I think President Trump is going to see how the markets react. He's not going to like it. And he's going to start punching holes through this pretty much as fast as possible. But Democrats finally got their talking point. All they had to do is wait. And now they got it. So Democrats are saying the recession is a coming.
It is recession day, says Hakeem Jeffries, the House Minority Leader. Remember, Republicans have the barest of bare majorities in the House. Democrats just won the Wisconsin Supreme Court, which means that they are going to redistrict and add a couple of seats. So if there is any sort of recession at all, mildest recession, Democrats are taking the House. Here's Hakeem Jeffries looking more excited than he has in months. Not a single administrative action has been done by Donald Trump, House Republicans, or Senate Republicans...
to lower the high cost of living in the United States of America. In fact, Republicans are crashing the American economy in real time and driving us to a recession. This is not Liberation Day, it's Recession Day. Well, he's certainly hoping it is.
And herein lies the problem. They've been rooting for a session. I mean, Democrats are rooting for a session. So the number one thing you don't want to do is, you know, jump on a rake. Chuck Schumer, the Senate minority leader who's been on the outs with his own party, he's looking pretty fresh and peppery as well in the aftermath of the announcement. This map has how much each state would pay for this absurd, crazy, chaotic trade war. But the worst thing about it is that it so hurts American families.
it is estimated that the average American family will pay more than $5,000 out of their pocket to pay for these tariffs. Meanwhile, James Carville jumping on the bandwagon and torching President Trump over the tariff regime.
They're just Trump going Paul mad. He gets in there and he figures, I don't have to get approval from Congress. I don't need to bring it to a cabinet. I can just do this. And so the idea that he can just do something on his own unilaterally has great appeal to him.
And then, of course, everybody's got to call him to get because you can exempt people. And so he likes getting you up for anything. He loves having foreign people call and say, hey, can you exempt, you know, finish steel from these or whatever it is. And it's all just a play. There's no policy behind it.
It's just his ego playing itself out in public. Now, let's say that that's right. Let's say that President Trump actually is able to get a bunch of countries to announce that they are reshoring American manufacturing or that they're going to lower their own tariffs. OK, so he gets the win if the price is going to be in the pudding, as it always is, because the thing about economics, you can feel it in your pocketbook. Economic policy, you feel at your kitchen table. Economic policy is the thing that you can tell every time you open up your grocery bill every single time.
So the proof's going to be in the pudding. If the prices go up, if your business is having trouble making payroll, if consumption goes down, if investment goes down because investors are freaked out because they're getting whipsawed like nobody's business. Again, I was talking with investors pretty much all day yesterday, given what was going on. And the number one thing that I was hearing from major investors is, I don't know what the hell is going on. That was the number one thing. Before and after, the amount of confusion, chaos in the markets,
A feeling of complete dyspeptic ulcer, ridden kind of churn. That is very real. And that is not good for markets because there's a bunch of money sitting on the sidelines waiting to be invested. There's a bunch of economic growth ready to go. Have you checked lately to see if your home's title is still in your name?
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Get a free title history report and access your personal title expert, a $250 value when you sign up at hometitlelock.com and use promo code Daily Wire. That's hometitlelock.com, promo code Daily Wire. So again, the markets are reacting as you would expect the markets to react. They opened just in the trash heap this morning. When the bell sounded to open the market, the Dow Jones Industrial Average plummeted immediately more than 1,000 points. The S&P 500 plummeted more than 3%. The NASDAQ plummeted
almost four and a half percent that was on open now cnbc actually obtained audio of the ceo of restoration hardware whose stock got pummeled this morning on open he was doing a call with his investors it was an open call and here was his reaction to what was going on in the markets when he found out what had happened to his stock do we have that sound bill yeah um so gary friedman's on the call and apparently is notified in the middle of the call that his stock was down 25 take a listen
in this race. And I don't know, like, I don't know how poor it's our stock now. I mean, I guess, I guess, you know, the stock went down, you know, based on some of the numbers we reported and then it got killed because of, oh, really? Okay. I just looked at the screen. I had to look at it. Oh boy. Oh boy. So if that's the reaction across the country, that is not going to be great. So the question is going to be how the markets take this as it sinks in.
What's going to happen over the course of the next week? Is President Trump going to send out surrogates like the Treasury Secretary to walk some of this back to try and point out where an off-ramp is? Or is he just going to keep doubling down on the theory that it's short-term pain for long-term gain? If so, he's going to have to explain how short-term the pain is and what exactly the long-term gain is because that has not even been spelled out at this point. If the idea is that other countries are just going to reshore to the United States to take advantage of our markets in some way, but we will leave tariffs on the
on stuff that they export to us, or they could just form trade blocks themselves and then go make time with the Chinese. They could do that. There are real world implications for this sort of stuff. Trade wars are in fact not good and not easy to win, particularly if you don't actually have a plan.
You actually have to have a plan. So I want somebody to lay out that plan. Seriously, you've heard me on today's show pretty animated about how I don't think that this is particularly good policy. So what I would love is for somebody to make the case as to why this is actually excellent policy, why this is going to be salutary for the United States, why this is going to benefit the people of the United States en masse. And if you're going to call for sacrifice from the American people, the question is, what is the thing on the other side of that sacrifice that is better and good?
What is that thing? There are a lot of theories out there. Things like, well, what if we weaken the dollar? Meaning there's just less demand in international trade for the American dollar because people are tariffing us and we're tariffing them. And then when we weaken the dollar, then we can pay off our debt more easily or something like that. Well, you're not going to pay off your debt unless you grow the economy or inflate your way out. That's just the reality. So that's not a great answer.
If the case is that we need to reshore, then what we should be doing is targeting the places where we want to reshore the most and understand that there are costs to doing that to consumers and to businesses because that, of course, is very real. But I have yet to hear an actual explanation. What I've heard so far from people inside the administration, unfortunately, I wish this weren't the case, but I've heard so far is a lot of casting of various people
aspersions at foreign countries for engaging in trade with us, regardless of whether they are good or bad, because we're treating Canada the same way we're treating China here. And this is why I think the markets are confused. Investors are confused. Confusion and fear are going to breed sell-offs. That is what they're going to breed. Less investment, less job growth. It's
This is all avoidable. It's all avoidable. We need to hear an actual narrative, not a bunch of talking points that are generated for a cork board that is filled with statistics made up by some sort of AI. Well, joining us online to discuss everything economics related is Representative Jody Arrington, of course, from Texas. He is the House Budget Committee Chairman. Representative, thanks so much for joining the show. I really appreciate it.
You bet, Ben. Great to be with you. Well, I do want to get to the budget, the big, beautiful bill and all that. Obviously, I'd be remiss if I didn't start with the big economic news, perhaps of the decade, which would be the president's announcement of his tariffs yesterday. The markets reacted quite poorly this morning. Obviously, Dow Jones Industrial Average dumped 3% on open. Similar numbers from the S&P 500, the Nasdaq down almost 5%.
What do you make of the tariffs? Do you think that they are geared toward the lowering of tariffs in other countries? What are you hoping President Trump is going to achieve with this?
I hope past is prologue and that the same strategies that were applied in President Trump's first term that were successful in resetting the trade arrangement or relationship with our trading partners happens in this round, and I suspect it will. So we just need a level playing field for manufacturers, for farmers, and for our workers
And I think that's a pretty basic principle that we should rally around the president for. We've had our manufacturing and industrial base hollowed out over the years. We've suppressed worker wages in this country. We've left
economic activity and growth on the table, all because we've allowed other countries to take advantage of our low barriers to entry or access to our markets while they've used tariffs and a lot of non-tariff barriers
to effectively tax our products going in to their market. So this reset's important. There will be pain and some disruption on the front end, but in the long run, we have to do it. And the big piece of this that is probably underestimated and undervalued
is our dependence on other countries for drugs, for computer chips, and other important products and materials for our national security or public safety. So all in all, this will be a huge boon to this economy and critical to our national security.
Trump has to stay the course. We have to support him. And I'm all in. Congressman, I do have to ask a couple more questions on that. One is, you mentioned semiconductors. You mentioned some of the other products that are national security related. He's already exempted, he says, semiconductors from the import tariffs, presumably because it would raise prices too much on so many of the products.
that we use. And I guess the other question is that the sheet that he put out yesterday, that the administration put out labeling tariff rates at 70, 80, 90% in some of these countries, it appears that that was calculated by essentially just taking the trade deficits with those countries and dividing it into the imports to the United States from those countries.
and coming up with a percentage that really has nothing to do with the tariff rate. So for example, South Korea is listed on this particular form as having a 50% tariff rate. We have a free trade agreement with South Korea. We pay an effective tariff rate in South Korea of something like 0.8%. Even if you add their value-added tax on top, you're talking about like a 10% tariff, certainly not a 50% tariff. My problem with that calculation is I'm with you. I want them to lower their trade barriers, but
It seems to me that if you're a country like, for example, Israel literally yesterday announced zero tariffs on American products coming in. We hit them with a 17% tariff anyway. What sort of deliverable is the administration actually looking for? That's the thing I want clarity on. If there's a deliverable on the other end of these tariffs, sure, sounds great. What do you think the deliverable ought to be?
Well, I think it should just be an apples to apples fairness in terms of trade policy. So it should be tariffs. It should be there are non-tariff sort of technical barriers like GMO with respect to our ag products.
There are quotas that are not considered tariff, but they're still huge barriers. They've been for many years for dairy products going into Canada. That was part of the restructuring of the NAFTA to USMCA.
And so there's a number of ways, VAT taxes, border adjustment taxes. So I think the president and his team are looking at the totality of it, but I'm with you. It needs to be apples to apples. We're not looking for isolationism or we're not looking for Chinese industrial policy where
We're subsidizing our guys and blocking out competition from others. We believe in free markets and competition, but free markets and free trade don't exist if they're not fair on an apples to apples trade policy basis.
I think that's a good fundamental principle in trade policy and trade negotiations. And Congressman Arrington, one of the things that I think that people in the markets are worried about is that there's been a lot of whipsawing, a lot of kind of policy uncertainty so far, particularly with regards to this stuff. The investors that I know are kind of holding out their money, waiting to see where everything settles, which isn't an unreasonable position given the changes. President Trump is declaring these tariffs on a national emergency basis. And the national emergency that he's claiming is the trade deficit.
It is difficult to see how a trade deficit amounts to a national emergency under the law. Where do you think the line of congressional authority lays with regard to tariffs as opposed to executive authority on tariffs? That's a great question. I think there are national security implications if we can't
make materials that go into making war machines that protect our country and our allies like Israel. So that's one you have to watch closely. I think we all were surprised during COVID to find out that we couldn't get protective gear for our healthcare workers or that 90% of our antibiotics, for example, were made in China.
And then, you know, computer chips that run everything effectively. We were a sole source provider with Taiwan. So you have to look at these things I agree with in terms of where is the national security or public safety nexus.
And then on all and on everything else, Ben, it needs to be the apples to apples fairness issue. And because I do think we've been taken for granted. That's why we have a two to one, three to one deficit with the top 20.
countries representing the top 20 largest economies in the world. So Congressman Arrington, all of this makes it that much more important that the big, beautiful buzzer resolution actually get passed because the market's already priced in, I assume, because pretty much everyone I'm talking to has.
The permanence of the Trump tax cuts, if that were to disappear, there would be a massive market catastrophe. I think it's pretty clear to everybody that the big, beautiful bill needs to happen. Where does that stand? How do you see that being ushered through the process?
Well, let's just go back and look at just real quickly the first term. We had the highest levels of business investment, R&D investment. We had the lowest unemployment. We lifted 6 million people out of poverty.
All of this was the comprehensive economic policy agenda, which included reset on trade, but it also was good energy policy, good tax policy and work incentives, right? Work incentives for work capable adults.
So we've got to get back transition from unbridled spending and failed economic policies to this agenda, most of which, to your point, is wrapped up in this budget reconciliation bill. We need to lock in the low taxes. We certainly can't have $400 billion tax hikes in the first year, which sent us into a recession. We can't add 22% on average of
of a tax hike on tax paying Americans after Bidenflation, which was about a 20% regressive tax hike. So couldn't agree more. That's in there, opening up energy production, deregulating the economy, work incentives, investment in military and border security, all in there. That's why it's one big, beautiful bill, right? That is the full America first agenda for the most part and the most consequential piece of legislation in my lifetime, Ben, but
We have to make sure that as we advance this and all the cost to it, we start to bend the spending curve that's driving an unsustainable debt. And Republicans have failed in the past to do that. And I want to make certain.
not just for this great country, our economy, and our current security or defense readiness, but for our children who are going to inherit the whirlwind of our recklessness now to the tune of $36 trillion in debt, $2 trillion annual deficits.
a trillion dollars just to service the debt. Those are all deferred taxes on our children. So we have to have offsets. We cannot increase the deficit and we gotta get our country on a sustainable and responsible path. That's missing from the Senate's bill. That was in the House bill. And I made sure of it along with other colleagues. So at the end of this rainbow, we have to get to a spot that we reignite economic growth through all the policies we've talked about, including tax,
But we're bringing the debt to GDP down. We're bringing the deficit to GDP down. Otherwise, we bankrupt the country and none of this matters. None of it. And we're not the leader of the free world. And our values aren't the dominant values that influence the world. And we can't support our allies, etc., etc.,
Congressman Arrington, I've said on the show that you co-authored with Phil Graham, former chairman of the Senate Banking Committee, the single most important op-ed of the last five years, which was this op-ed in the Wall Street Journal talking about how means-tested welfare programs are the thing that's bankrupting the United States, that for the most part, Medicare and Social Security are paid for. For the most part, not in their entirety, but the thing that actually is rising dramatically continues to be the cost on the means-tested welfare programs. When you talk about the budget bill, what in your version of the budget bill was aimed at sort of
bringing down the cost curve on those? Well, a whole lot. I mean, you have to have, if you just took the Medicaid, that's the largest means-tested welfare program. It doesn't have a work requirement for able-bodied adults. Like all the other programs from the Bill Clinton Welfare to Work program,
era that actually brought down dependence on welfare by 80%, but it's been gamed by states and others, especially California. So we have to close the loopholes there and we have to put actual expectations for work capable adults in these programs, like in Medicaid. If you just reviewed the roles,
This is a basic program integrity measure that everybody can understand. If you review the roles and make sure that those benefiting are legally eligible and they're not here illegally in this country or for other reasons aren't eligible, then you save $160 billion just reviewing it twice
versus once. So it's all of the above. You also have states and local special interests that siphon money away from these programs that have nothing to do with the beneficiary. So it's broken. It's part of what's bankrupting the country. And we've got to act responsibly as we write this fiscal ship to focus on these welfare programs. Well, that's House Budget Chairman Jody Arrington doing good work on the Hill. Really appreciate your time, sir. And thanks for your insight.
Ben, it's an honor to be with you. Meanwhile, there is, in fact, breaking news on the Joe Biden front, believe it or not. So there is a brand new piece out from the UK Guardian suggesting a new book. Top Biden aides were perfectly well aware that Joe Biden was ailing during the 2024 election. Ron Klain served Biden from 2021 to 2023. And then he came back last June to run debate prep. According to Klain in this new book,
It turned out Biden, quote, did not know what Trump had been saying and couldn't grasp what the back and forth was. Left preparation and fell asleep by the pool, obsessed about foreign leaders saying, quote, these guys say I'm doing a great job as president, so I must be a great president. Didn't really understand what the argument was on inflation and had nothing to say about a second term other than finish the job. As described by Klain to a reporter, Chris Whipple, at one point Biden had an idea, quote, if he looks perplexed when Trump talked, voters would understand that Trump was an idiot.
Klain replied, sir, when you look perplexed, people just think you're perplexed. And this is our problem in the race. The book is titled Uncharted, How Trump Beat Biden, Harris, and the Odds in the Wildest Campaign in History. Well, I mean, yes, obviously Klain was hiding it. Klain, by the way, has been saying that Biden should have stayed in the race, which, again, is an easy sort of revisionist history, given the fact that Harris then went on to lose to Donald Trump.
But it's pretty unbelievable. These stories are crazy. Whipple says, quote, at his first meeting with Biden in Aspen Lodge, the president's cabin, Klain was startled. He'd never seen him so exhausted and out of it. Biden was unaware of what was happening in his own campaign. Halfway through the session, the president excused himself and went off to sit by the pool. That evening, Biden met again with Klain and his team. Mike Donilon, Steve Ruschetti, Bruce Reed. We sat around the table, said Klain. Biden had answers on cards. He was just extremely exhausted. And I was struck by how out of touch with American politics he was. He was just very, very focused on his interactions with NATO leaders.
Klain wondered half seriously if Biden thought he was president of NATO instead of the United States. Ooh, boy. Well, I wonder why he lost. I wonder why he dropped out and then Kamala Harris lost. Meanwhile, in other hilarious news, Jonathan Allen of Politico is now reporting that Barack Obama behind the scenes after Biden dropped out was actually working to scuttle Kamala Harris's presidential bid. This is another one of these new books called Fight Inside the Wildest Battle for the White House. Here's Jonathan Allen explaining.
President Obama absolutely did not think that Joe Biden should continue, according to our sources, close to President Obama. And he also didn't want Kamala Harris to be the replacement for Biden. He didn't think that she was the best choice for Democrats. And he worked really behind the scenes for a long time to try to have
A mini primary or an open convention or mini primary leading to an open convention did not have faith in her ability to win the election. So and as it as it turned out, she didn't win, but he was really working against her. Well, it turns out that I think that's a little excuse making by Barack Obama, but maybe he shouldn't have selected Joe Biden as his vice president. And then maybe he shouldn't have selected Kamala Harris.
as Joe Biden's vice president, who's very involved in that, actually, back in 2020. Alrighty, folks, the show continues in a moment. We are going to be talking about Elon Musk at Doge. Is he out? Politico says he may be on his way out. We'll get into that. The administration denies. Plus, we'll take your questions, as always. Head on over to Daily Wire. Plus, if you're not a member, become a member. Use code Shapiro. Check out for two months free on all annual plans. Click that link in the description and join us.